How can a private entrepreneur pay for the services of a lawyer and notary?

For Sole Proprietorships that work with lawyers or notaries due to the specifics of their business, it is useful to know how to correctly pay for the services received.

According to the Law, the nature of interaction and the rules for paying a fee depend on the tax regime and the legal status of the lawyer.

Forms of legal practice by attorneys

Legal practice may be carried out in the following forms:

• individually, as a self-employed person: you must register with the tax authority and be recorded as a person engaged in independent professional activity;

• a law office (bureau) established by one attorney and operating under a charter: you must be registered with the tax authority as a legal entity;

• a bar association formed by several members (attorneys) and operating under a charter: registration with the State Tax Service as a legal entity is also required with the selection of the appropriate tax system.

Can an attorney be a Sole Proprietorship?

According to Art. 291 of the Tax Code of Ukraine, individuals engaged in independent professional activity cannot choose the simplified taxation system (single tax). It applies only to legal entities or Sole Proprietorships. Therefore, a Sole Proprietorship cannot carry out legal practice.

However, the law allows lawyers to simultaneously conduct business activities not related to legal practice. That is, a lawyer may be registered both as a self-employed person performing independent professional activity and, separately, as a Sole Proprietorship. In this case, income from business and legal activities will be taxed separately.

Who can obtain attorney services?

Sole Proprietorships and legal entities may receive services from a lawyer or notary regardless of their tax system. However, Sole Proprietorships on the single tax (Group 2) cannot provide their services to lawyers or notaries if they are legal entities on the general taxation system.

How can a Sole Proprietorship pay for attorney/notary services provided by self-employed persons?

A Sole Proprietorship may pay for attorney or notarial services by bank transfer using the contractor’s banking details after receiving a certificate in the form No. 34-ОПП from the contractor. Since lawyers and notaries are self-employed persons, the Sole Proprietorship does not have to withhold personal income tax or the military levy when making the payment.

To transfer payment for services, you need to do the following:

1. Obtain from the contractor a certificate in the form No. 34-ОПП confirming registration of the individual with the tax authority: this document confirms the registration of the lawyer/notary as a self-employed person with the tax service. The presence of this document allows payment without tax withholding.

2. Obtain from the contractor a certificate in the form No. 2-ЄСВ: the document confirms that the lawyer/notary independently pays the Unified Social Contribution.

3. Obtain payment details: the contractor will provide bank details, which must include the recipient’s name, TIN (РНОКПП), and current account.

4. Make the payment: via a bank or internet banking with the payment purpose specified.

5. Confirm the payment: keep the payment order and, if necessary, provide a copy of the contractor’s No. 34-ОПП certificate.

An important nuance to remember is that attorney/notary services used in business activities are most often included in administrative expenses. Therefore, such expenses should be reflected by the lawyer in the relevant lines of the tax return.

How can a legal entity pay for the services of a bar association?

A legal entity (company, enterprise, etc.) may pay for services provided by a lawyer that is also a legal entity by bank transfer to the account of the bar association or law office. Such a transfer is made on the basis of a concluded agreement on the provision/receipt of legal assistance. The document must specify the following information:

• the list of services provided and deadlines for their delivery;

• the cost of services and the payment procedure;

• the recipient’s name, EDRPOU code, and settlement account.

An advance payment received by the contractor may be recognized as the lawyer’s income after the services have been completed.

Sole Proprietorships that receive services from lawyers and notaries should not forget proper bookkeeping and should record expenses related to business activities. This will help avoid tax penalties for submitting inaccurate financial statements in the amount of UAH 1,700 to 2,550 for the first violation and from UAH 2,550 to 3,400 for a repeated violation within a year.

Frequently Asked Questions